A trustee has certain, so-called,
"fiduciary" duties. What this means is that
you will be held to a higher standard of
conduct than the average person when dealing
with matters related to the Trust. In
general, you must carry out your duties with
care, and never put your own personal
interests above the beneficiary's.

For
example, you are prohibited from borrowing
funds from the Trust or from using any Trust
funds for personal benefit (e.g. to pay your
own bills, invest in a business in which you
are involved, etc.). If ever in doubt over
your duties as Trustee, you should seek
advice from someone well versed in this
area. Depending on the particular
circumstances, the loss of Medicaid, for
even one month, can be significant and may
result in an overpayment.

REPORTING REQUIREMENTS

To the Social Security
Administration: The Social Security
Administration needs to be provided with
general information concerning the existence
and operation of the Trust. The SSI program
may thereafter require periodic reports
reflecting how trust distributions were
ultimately made. It will therefore be
important for you to keep careful records
with respect to the goods, services and
payments made from the Trust.

To Medicaid: You should
keep the same records you report to Social
Security for reporting to Medicaid. Under
some circumstances, Social Security may not
certify the beneficiary for Medicaid. In
that event, you will need to report to
Medicaid directly on an annual basis or
after there is a change in circumstances.

To the Internal Revenue Service:
A trustee is required to file a form
1041-U.S. Fiduciary Income Tax Return for
any calendar year in which the Trust earns
income in excess of $600 if the beneficiary
is not disabled or $3,650 (for tax year
2010) if the beneficiary is disabled (this
figure may change annually per I.R.S.
rules). If the beneficiary is disabled the
IRS should consider this Trust to be a
"qualified disability trust." Accordingly,
you should consult with a certified public
accountant to discuss accounting procedures
and income tax filing requirements for the
Trust.

For more
information, please call Solem, Mack &
Steinhoff at
303-761-4900, or
contact
us through our web site.